2018-2019 Quebec Budget: Tax Bulletin and Comments

QUÉBEC CITY, March 27, 2018 – Raymond Chabot Grant Thornton published its tax bulletin on measures unveiled by the Quebec Finance Minister and is taking this opportunity to applaud certain measures and highlight a number of issues it believes to be of importance to further increase Quebec’s competitiveness. The tax summary was prepared by a team of experts in the budget lock-up.

Finance Minister Carlos Leitão’s fifth budget may be proposing significant measures to support the growth of Quebec businesses, but the numerous measures announced will be plunging Quebec back into a deficit for the next two years.

Anticipated tax relief for SMEs welcomed

Raymond Chabot Grant Thornton commends the income tax reduction for SMEs in the services and construction sectors and the payroll tax reduction, among others. Tax partner, Luc Lacombe, stated: “These direct $2.2B savings over five years are important for our economic drivers. SMEs should be focusing on ways to innovate and stand out, here and on the foreign marketplace, as well as on their growth and Quebec’s prosperity, not worrying about the enormous tax burden placed upon them. The measures announced today address this concern.”

In reference to the announced tax cut for SMEs in the services and construction industries, President and CEO, Emilio B. Imbriglio, said: “This was something that had to be done; businesses need a boost to innovate and continue prospering. The Finance Minister could have gone further by following our recommendation to eliminate the tax on the first $500,000 of taxable income for all SMEs in order to fuel their growth. Eliminating this tax would be subject to SME’s savings being applied to productivity, employment and innovation, in a manner that avoids abuses.”

Supporting business transfers: a strategic issue

Raymond Chabot Grant Thornton applauds the 2017-2022 Government Action Plan on Entrepreneurship released March 23rd. Stimulating entrepreneurship and fostering business transfers are important priorities for a strong Quebec. Regional Vice-President and National Business Transfer Leader, Eric Dufour, added: “In order for business transfers to be more efficient and sound, it would have been better if the budget had removed the government’s current restrictions that hinder family succession. Business owners are subject to very restrictive conditions designed to avoid abuses, for example, requiring a total, rather than a partial transfer of the business, thereby precluding any interest by the owner after the sale.”

Business immigration in support of innovation

In the prebudget consultations, Raymond Chabot Grant Thornton recommended that the Quebec government gradually increase the number of immigrant investor files and increase the regulatory investment required of immigrant investors from $800,000 to $900,000.

Marc Audet, President and CEO of Auray Capital Canada, a subsidiary of Raymond Chabot Grant Thornton, stated: “Our objective with this innovative proposal is for the $100,000 difference to be considered as a direct, non-refundable contribution by the investor to a Quebec development fund, similar to the fund to finance innovative manufacturers. At no added cost to Quebec taxpayers, this recommendation would serve to generate over $1B in additional income over the next five years, provided the quotas and accepted files are increased. Demand for the Quebec immigrant investor program is strong. This formula would increase Quebeckers’ financial means, while fostering the retention of immigrant investors, which remains a major issue.”

Managing public debt and plunging Quebec back into a deficit

In its prebudget recommendations submitted to the government last February, the firm emphasized the importance of the government respecting its debt reduction objectives, particularly in the context of rising interest rates. Imbriglio concluded: “We are very pleased to see that the Generations Fund will be used to partially pay down Quebec’s debt over the next five years. The government’s development must not be detrimental to future generations. Stringent debt management is crucial. However, it would have been better to maintain fiscal restraint rather than plunging Quebec into a deficit for the next two years, as provided in the current scenario.”

Founded in 1948, Raymond Chabot Grant Thornton has become a Canadian leader in the areas of assurance, tax, consulting services and business recovery and reorganization, with more than 2,300 professionals, including approximately 200 partners. Together, Raymond Chabot Grant Thornton and Grant Thornton LLP, another Canadian member firm of Grant Thornton International Ltd, comprise more than 4,200 professionals and close to 140 offices across Canada to help Canadian organizations achieve their full growth potential both locally and globally. Grant Thornton International Ltd’s member and correspondent firms provide clients with the expertise of some 47,000 professionals in more than 130 countries.

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For A More Competitive Economy: Emilio B. Imbriglio’s Conference

“For A More Competitive Economy”: Emilio B. Imbriglio’s Conference on May 9th at the AMBAQ

Quebec has undeniable competitive advantages. How can we capitalize on these strengths? Emilio B. Imbriglio, President and CEO of Raymond Chabot Grant Thornton, will address this topic during a lunch conference organized by the Association des MBA du Québec (AMBAQ) to encourage businesses to go further.

About the AMBAQ

The Association des MBA du Québec is an organization representing all MBA community members: francophones, anglophones, students or graduates. The AMBAQ offers different exchange platforms centered on management excellence, leadership and innovation.

Since the U.S. President’s announcement of the proposed Tax Cuts and Jobs Act last December, Raymond Chabot Grant Thornton has offered many free conferences across the province to explain the new measures to clients and the impacts on Canadian citizens and businesses who do business south of the border.

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Tips on avoiding the spiral of debt

In a recent radio interview with Stéphane Gendron on Énergie 98.9 FM in Québec City, Éric Lebel, Partner and Licensed Insolvency Trustee, spoke about the risks and implications of debt.

Éric also explained the consumer proposal process and its advantages over personal bankruptcy. Additionally, he provided several tips to listeners on the sound management of equity and debt and explained how they could restore their financial institution’s confidence.